iivi-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to .

Commission File Number: 001-39375

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COHERENT CORP.

(Exact name of registrant as specified in its charter)

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Pennsylvania		25-1214948
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

375 Saxonburg Boulevard		16056
Saxonburg,	PA	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: 724-352-4455

N/A

(Former name, former address and former fiscal year, if changed since last report)

________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	COHR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

At November 3, 2023, 151,482,324 shares of Common Stock, no par value, of the registrant were outstanding.

Table of Contents

COHERENT CORP.

INDEX


		Page No.

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets – September 30, 2023 and June 30, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Earnings (Loss) – Three Months Ended September 30, 2023 and 2022 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended September 30, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows – Three Months Ended September 30, 2023 and 2022 (Unaudited)	6
	Condensed Consolidated Statements of Shareholders’ Equity and Mezzanine Equity – Three Months Ended September 30, 2023 and 2022 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 5.	Other Information	32
Item 6.	Exhibits	33

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Coherent Corp. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

($000)


	September 30, 2023		June 30, 2023
Assets
Current Assets
Cash, cash equivalents, and restricted cash	$	941,081	$	833,333
Accounts receivable - less allowance for doubtful accounts of $7,598 at September 30, 2023 and $8,005 at June 30, 2023	795,730		901,531
Inventories	1,280,755		1,272,333
Prepaid and refundable income taxes	19,745		28,271
Prepaid and other current assets	206,420		216,530
Total Current Assets	3,243,731		3,251,998
Property, plant & equipment, net	1,775,384		1,782,035
Goodwill	4,460,144		4,512,700
Other intangible assets, net	3,695,578		3,814,684
Deferred income taxes	39,042		37,748
Other assets	307,419		311,968
Total Assets	$	13,521,298	$	13,711,133
Liabilities, Mezzanine Equity and Shareholders' Equity
Current Liabilities
Current portion of long-term debt	$	74,730	$	74,836
Accounts payable	449,134		405,308
Accrued compensation and benefits	183,046		175,564
Operating lease current liabilities	37,203		38,271
Accrued income taxes payable	58,233		74,488
Other accrued liabilities	280,790		310,281
Total Current Liabilities	1,083,136		1,078,748
Long-term debt	4,219,366		4,234,962
Deferred income taxes	742,514		780,307
Operating lease liabilities	136,558		140,748
Other liabilities	236,150		247,402
Total Liabilities	6,417,724		6,482,167
Mezzanine Equity
Series B redeemable convertible preferred stock, no par value, 5% cumulative; issued - 215,000 shares at September 30, 2023 and June 30, 2023; redemption value - $2,338,840 and $2,309,966, respectively	2,271,588		2,241,415
Shareholders' Equity
Series A preferred stock, no par value, 6% cumulative; issued - 0 and 2,300,000 shares at September 30, 2023 and June 30, 2023, respectively	—		445,319
Common stock, no par value; authorized - 300,000,000 shares; issued - 166,764,680 shares at September 30, 2023; 154,719,413 shares at June 30, 2023	4,287,278		3,781,211
Accumulated other comprehensive income	5,052		109,726
Retained earnings	846,709		944,416
	5,139,039		5,280,672
Treasury stock, at cost; 15,501,849 shares at September 30, 2023 and 15,135,711 shares at June 30, 2023	(307,053)		(293,121)
Total Shareholders' Equity	4,831,986		4,987,551
Total Liabilities, Mezzanine Equity and Shareholders' Equity	$	13,521,298	$	13,711,133

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Earnings (Loss) (Unaudited)

($000, except per share data)


	Three Months Ended September 30,
	2023		2022
Revenues	$	1,053,083	$	1,344,570

Costs, Expenses, and Other Expense (Income)
Cost of goods sold	746,188		900,996
Internal research and development	113,488		121,084
Selling, general and administrative	211,697		280,014
Restructuring charges	3,018		—
Interest expense	73,258		61,889
Other expense (income), net	(6,269)		31,605
Total Costs, Expenses, & Other Expense	1,141,380		1,395,588

Loss Before Income Taxes	(88,297)		(51,018)

Income Tax Benefit	(20,763)		(12,320)

Net Loss	$	(67,534)	$	(38,698)

Less: Dividends on Preferred Stock	$	30,173	$	35,577
Net Loss available to the Common Shareholders	$	(97,707)	$	(74,275)

Basic Loss Per Share	$	(0.65)	$	(0.56)

Diluted Loss Per Share	$	(0.65)	$	(0.56)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

($000)


	Three Months Ended September 30,
		2023		2022
Net loss		$	(67,534)	$	(38,698)
Other comprehensive income (loss):
Foreign currency translation adjustments		(107,903)		(132,371)
Change in fair value of interest rate swap, net of taxes of $(1,277) and $3,452 for the three months ended September 30, 2023 and September 30, 2022, respectively		(4,662)		12,604
Change in fair value of interest rate cap, net of taxes of $2,145 and $9,258 for the three months ended September 30, 2023 and September 30, 2022, respectively		7,600		20,464
Pension adjustment, net of taxes of $0 for the three months ended September 30, 2023 and September 30, 2022		291		39
Comprehensive loss		$	(172,208)	$	(137,962)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Coherent Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

($000)


	Three Months Ended September 30,
	2023		2022
Cash Flows from Operating Activities
Net loss	$	(67,534)	$	(38,698)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	65,698		64,669
Amortization	72,661		82,617
Share-based compensation expense	45,957		54,185
Amortization of discount on convertible debt and debt issuance costs	3,567		4,466
Non-cash restructuring charges	319		—
Gains on disposal of property, plant and equipment	(101)		—
Unrealized gains on foreign currency remeasurements and transactions	(14,462)		(22,273)
Loss (earnings) from equity investments	243		(613)
Deferred income taxes	(39,627)		(14,479)

Loss on debt extinguishment	—		6,835
Increase (decrease) in cash from changes in (net of effect of acquisitions):
Accounts receivable	116,295		(1,326)
Inventories	(16,709)		7,514
Accounts payable	41,985		(42,865)
Contract liabilities	(9,769)		44,419
Income taxes	(2,806)		(8,633)
Accrued compensation and benefits	7,482		(44,910)
Other operating net liabilities	(4,396)		(11,330)
Net cash provided by operating activities	198,803		79,577
Cash Flows from Investing Activities
Additions to property, plant & equipment	(62,197)		(138,990)
Purchases of businesses, net of cash acquired	—		(5,488,556)




Other investing activities	(1,978)		(711)
Net cash used in investing activities	(64,175)		(5,628,257)
Cash Flows from Financing Activities


Proceeds from borrowings of Term A Facility	—		850,000
Proceeds from borrowings of Term B Facility	—		2,800,000
Proceeds from borrowings of Revolving Credit Facility

SEC Form 10-Q filed by Coherent Corp.